This case clarifies that a fax transmission, unlike email or other digital data, does not qualify as electronic evidence under the Electronic Commerce Act of 2000. While the law aimed to give virtual documents the same legal weight as paper documents, faxes—which start as paper originals—are treated differently. This distinction impacts how contracts are proven in court. While photocopies of fax transmissions are not admissible as electronic evidence, the court can still consider other documents to determine if there was a breach of contract of sale, and uphold obligations and assess damages where warranted.

Do Old-School Faxes Have a Place in the Modern World of Electronic Evidence?

In the case of MCC Industrial Sales Corp. v. Ssangyong Corp., the Supreme Court grappled with whether fax transmissions could be considered electronic evidence under the Electronic Commerce Act of 2000 (R.A. No. 8792). The dispute arose when MCC Industrial Sales failed to fulfill its obligations under a contract to purchase steel from Ssangyong Corporation. When Ssangyong sued for breach of contract, a key point of contention was whether photocopies of faxed documents could be admitted as evidence.

The heart of the matter involved pro forma invoices exchanged between the two companies, which Ssangyong presented to prove the existence and terms of their sales agreement. MCC, however, argued that these photocopies were inadmissible, claiming that only original fax transmittals could be considered valid electronic evidence. This led the Supreme Court to delve into the intricacies of the Electronic Commerce Act and its implications for business transactions conducted via fax.

The Court emphasized that for a document to qualify as electronic evidence, it must first meet the definition of an “electronic data message” or an “electronic document” as defined under R.A. No. 8792. The Act defines an electronic data message as information generated, sent, received, or stored by electronic, optical, or similar means. An electronic document is similarly defined as information that establishes a right, extinguishes an obligation, or proves a fact that is received, recorded, transmitted, stored, processed, retrieved, or produced electronically.

Building on this principle, the Court examined the legislative intent behind the Electronic Commerce Act, particularly noting the deletion of a phrase from the UNCITRAL Model Law that included “telecopy” (fax) within the definition of data messages. This deletion, the Court reasoned, was deliberate, indicating that Congress did not intend for ordinary fax transmissions to be treated as electronic evidence. This approach contrasts with modern digital communications like email, which exist solely in electronic form.

“Facsimile transmissions are not, in this sense, ‘paperless,’ but verily are paper-based,” the Court stated. A fax transmission involves scanning an original document, transmitting it over a phone line, and reprinting it at the receiving end. This process results in two distinct paper copies—the original and the facsimile—each with potentially different legal effects. Furthermore, the Court noted that the Implementing Rules and Regulations (IRR) of R.A. No. 8792, by including telecopy in its definition of “electronic data message,” exceeded the scope of the law itself.

As such, the Supreme Court ultimately held that a fax transmission does not fall under the definition of “electronic data message” or “electronic document” as contemplated by the Electronic Commerce Act. Accordingly, photocopies of fax transmissions cannot be considered electronic evidence and are inadmissible as such. Despite this, the Court affirmed that a contract of sale existed between MCC and Ssangyong based on other evidence presented. The failure of MCC to open a letter of credit constituted a breach of contract, entitling Ssangyong to damages.

In its analysis, the Supreme Court distinguished between the admissibility of the faxed documents and the underlying contract itself. Even though the faxed documents were not admissible as electronic evidence, other documents and conduct demonstrated a valid contract. MCC’s acknowledgment of the contract and its failure to meet payment obligations established its breach.

The Court however adjusted the damages awarded to Ssangyong, the Court determined that actual damages were not sufficiently proven. Consequently, the Court awarded nominal damages in the amount of P200,000.00 to Ssangyong in recognition of the breach, along with the attorney’s fees as initially awarded by the trial court.

FAQs

What was the key issue in this case?	The key issue was whether photocopies of fax transmissions are admissible as electronic evidence under the Electronic Commerce Act of 2000. The court had to determine if a fax was the same as email or other forms of virtual document.
What is the Electronic Commerce Act of 2000?	The Electronic Commerce Act of 2000 (R.A. No. 8792) is a Philippine law that aims to recognize and promote electronic commercial and non-commercial transactions and documents. The law seeks to provide a legal framework for electronic transactions, addressing issues of validity, admissibility, and enforceability.
Why were the fax transmissions not considered electronic evidence?	The Supreme Court held that fax transmissions are not electronic evidence because they originate from a paper document, unlike purely digital communications. Congress specifically excluded faxes (except computer-generated ones) from the definition of electronic data messages under the Electronic Commerce Act.
What is the best evidence rule?	The best evidence rule requires that the original document be presented in court to prove its contents. In the context of electronic evidence, a printout or output that accurately reflects the electronic data message is considered the equivalent of an original document.
What damages did the court ultimately award?	Although the trial and appellate courts awarded actual damages, the Supreme Court found that Ssangyong did not sufficiently prove its claim. The Supreme Court ultimately awarded nominal damages of P200,000.00 to Ssangyong.
How did this ruling impact Ssangyong Corporation?	The ruling meant that Ssangyong could not rely on the photocopies of fax transmissions as electronic evidence. However, Ssangyong was able to prove the existence of the contract through other documents and evidence.
What happens if a buyer fails to provide a letter of credit?	The Supreme Court noted in this case that if the buyer fails to open a letter of credit as stipulated, the seller or exporter is entitled to claim damages for such breach. Damages for failure to open a commercial credit may, in appropriate cases, include the loss of profit which the seller would reasonably have made had the transaction been carried out.
Why were attorney’s fees awarded in this case?	Attorney’s fees were awarded because MCC’s unjustified refusal to pay compelled Ssangyong to litigate to protect its rights. The court found that MCC’s breach of contract and subsequent failure to fulfill its obligations warranted the award of attorney’s fees.

This case serves as a reminder of the importance of understanding the nuances of electronic evidence and the need for clear documentation in business transactions. Although technology continues to evolve, some older methods, such as fax transmissions, are not afforded the same legal status as newer digital formats under the Electronic Commerce Act. Therefore, businesses must ensure their practices align with current legal standards to effectively protect their interests.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: MCC Industrial Sales Corporation v. Ssangyong Corporation, G.R. No. 170633, October 17, 2007